July 7, 2009

Did the pre-New Deal Supreme Court provide stronger protection for property rights?

By Did the pre-New Deal Supreme Court provide stronger protection for property rights?

Author: Timothy Sandefur

Our friends Eugene Volokh and Ilya Somin are engaged in something of a debate over whether the U.S. Supreme Court provided stronger protection for property rights in the pre-New Deal era—prior to 1934—than it does today. Professor Volokh argues that “the protection offered property rights during that era was not ‘very broad,’” while Professor Somin contends that the Court “did provide quite extensive protections for property rights that went far beyond what we have today.”

The problem here is probably in the terminology. The Supreme Court justices would presumably argue that in today’s world they provide significant protection for “property rights.” The question is, what is meant by property rights?

Today’s justices by and large mean something very different than what the pre-New Deal judges did. In the past, courts regarded property as a fundamental natural right; as a universal human right that was a central component of the liberty protected by the American constitutional order. Property rights were an aspect of the right of all individuals to direct and order their own lives without interference. As Professor Thomas G. West writes in Vindicating The Founders, the founding fathers regarded property rights as securing the right to acquire property, as well as other rights which were liberties of the human person. This was the general concept of property maintained by the Supreme Court justices up until the New Deal. (Obviously this is a broad description with many exceptions.)

The best way to describe this conception of property rights is through the old Latin phrase, sic utere tuo ut alienum non leadas, meaning that a person has a right to use property in whatever way does not harm another. This classical liberal understanding of property rights underlay the Constitution and was basically the idea of property rights prior to the Progressive Era at the end of the 19th century. (For a particularly interesting example of this understanding of private property, check out William Howard Taft’s law review article, The Right of Private Property, 3 Mich. L. J. 215 (1894)).

Even zoning, which Professor Volokh uses as an example of the pre-New Deal court’s restrictions on property rights, was upheld by Justice Sutherland in the Euclid case only because Sutherland believed that zoning laws were reconcilable with the sic utere understanding of private property.

By contrast, Progressive era thinkers such as Oliver Wendell Holmes, Louis Brandeis, and John Dewey, regarded property as a privilege which society granted to individuals for society’s purposes. Property consisted not an individual’s natural right to dominion over himself, his liberty, and the fruits of his labor, but of a realm of discretionary freedom which a person enjoyed thanks to the state’s decision to protect that realm. Nothing expresses this conception of property better than Louis Brandeis’ comment in his dissenting opinion in Truax v. Corrigan, 257 U.S. 312, 376 (1921), that “rights of property and the liberty of the individual must be remolded, from time to time, to meet the changing needs of society.”

Although Brandeis, like Holmes, was frequently in dissent when writing such things, this second conception of property rights became controlling law only a decade later, when the New Deal era court adopted this notion of individual rights in a series of cases beginning with 1934’s Nebbia v. New York, 291 U.S. 502 (1934), and Building and Loan v. Blaisdell, 290 U.S. 398 (1934).

It is from this second notion of property—the “privilege” conception of property, in which government can expand or contract in the service of “the changing needs of society”—that we get such things as the infamous eminent domain decision in Kelo, or the Supreme Court’s declaration in Penn Central v. New York, 438 U.S. 104, 124 (1978), that the government is not required to compensate property owners most of the time when it takes their property away to “adjust[] the benefits and burdens of economic life to promote the common good.” The founding fathers would have been mortified at the idea that government exists to adjust the benefits and burdens of economic life.

The point is that it is not the “breadth” of property rights protections that changed in the New Deal. That term really isn’t very precise anyway. What changed in the New Deal era was that Courts abandoned the sic utere conception of property rights and came to regard property as a social privilege which can be manipulated to serve whatever ends lawmakers decide is worthwhile, with virtually no judicial check.

Incidentally, the best discussion of these matters is G. Edward White’s book The Constitution And The New Deal.

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